New wage won't bring people out of poverty

Thursday, July 27, 2006Michael Jensen

In November, Missouri voters will get to decide if we want to raise the minimum wage here from $5.15 per hour to $6.50 per hour. The measure was placed on the ballot by the ever-popular initiative petition process.

Proponents of the minimum wage increase say that the current $5.15 is inadequate to provide a living and keeps many full-time workers locked into poverty. I wish I could provide you with the reams of paper I have received to justify this higher minimum wage. The backers have spent a bundle thusfar and we're not even close to the election.

Opponents of the higher wage argue that the "ripple effect" is the real problem. If starting wages are increased then, the argument goes, other wages will be forced upwards as well. Someone who has been working for a year and has increased their pay from the minimum to $6 per hour, for example, would expect that their wages would increase as well. And I believe they should.

The usual suspects are lined up on either side of the issue. Most business concerns - especially small businesses - believe that the higher wage will force them out of business. I think that's a hollow argument myself. But I also don't believe that this higher wage is somehow going to magically raise an entire class of people out of the dastardly reaches of poverty because they'll make a bit more money.

Here's what I think will happen. We'll approve the new higher minimum wage and thousands and thousands of Missourians will see other taxpayer-

provided benefits reduced because of their increased income.

Currently a single mother working for minimum wage is also eligible for housing assistance, food stamps, medical services and much, much more. So when we actually get down to the bottom line, minimum wage workers also receive other "hidden" benefits to help them make ends meet. That should not and will not change.

So what does it all mean. Low-level workers will get higher paychecks and then they'll get a few letters from the state. Their portion of their housing will likely increase, their food stamps will likely be reduced, their minimal portion of medical expenses will increase. In effect, the process of providing for the needs of these low wage earners will shift more to the business sector and less from the government sector. And that means the government will have more money to spread around. That in itself frightens the hell out of me.

But here's my position. Let's approve the minimum wage increase. Yep, let's start workers at $6.50 an hour. I'll vote for the measure tomorrow. And I hope and pray that I am wrong and that these newfound wages help some people climb a bit higher on the economic ladder because there are far too many people on that first rung of the ladder right now.

But if you think that this new wage is going to truly lift people out of poverty, you're dreaming.